Henrietta transfers cash of $75,000 and equipment with a fair market value of $25,000 (basis to her as a sole proprietor, $10,000) in exchange for a 40% profit and loss interest worth $100,000.
1. How much are Henrietta’s realized and recognized gains?
2. What is the amount of Henrietta’s basis in her partnership interest?
3. What is the partnership’s basis in the contributed equipment?